UBS has reiterated its buy rating on Apple (NASDAQ:AAPL), with a price target of $150. Apple stock has declined by more than 10% in last six months, prompted by general market decline and concern regarding slowdown in iPhone sales in China. China is Apple’s second largest market after US, contributing 25% of Apple’s revenue. What made the Chinese market more important for Apple was the growth rate. Apple had more than doubled its revenue from China in the last quarter. At that rate, China would have soon overtaken US as Apple’s largest market. But China is currently experiencing slow-down in growth which has roiled international markets and forced Federal Reserve to postpone hiking interest rates.

iPhone Upgrade Program

While the China slowdown had Apple investors worried, the recent decision by Apple to finance iPhone purchases has generated a lot of interest among investors. Amid a series of new product announcements, Apple introduced iPhone upgrade program on purchase of iPhone 6S and iPhone 6S plus. The program allows users to own the device with a monthly payment of $32 for 24 months. What makes the program more enticing is the fact that after making 12 monthly payments the customer is allowed to purchase the latest iPhone, and start a new two year period monthly payment plan. Many analysts believe that the program will shorten iPhone refresh cycle, padding the Apple bottom line.

Rating Upgrades

Analysts at UBS, who have reaffirmed their “buy” rating with a price target of $150, said that the instalment plan could be big deal for Apple with a potential to add 36 cents to Apple’s EPS, driving the share price to $200, which is around 70% more than today’s price. Similar recommendations were made by other analysts. Analysts at RBC, who have a price target of $150, said that the stock could touch $165. Apple stock has declined from an all-time high of $134 and is currently trading below its 100 day and 50 day moving averages.

The Bottomline

iPhone Upgrade Program is likely to be a strong profit driver for Apple. And with iPhone 6S off to a strong start, Apple’s current depressed valuations makes Apple a good investment opportunity.

Apple Stock Articles & Video

Apple provided comments on the proposed Federal Automated Vehicles Policy paper on self-driving cars. The US administration is persuaded that the rise of self-driving cars is inevitable, and is mostly concerned with social impact and safety. Apple intends to leverage AI to ensure road safety, and seems to have initial road testing in mind.

Credit Suisse Analyst Kulbinder Garcha has restated Apple Inc. Stock at Outperform. The analyst claims that iPhone 7 builds will be at 87M units in December quarter, which will be an all-time high. Is Apple heading for a huge holiday quarter? Should investors buy AAPL stock?

Supply constraints and mixed signals from high-end Chinese consumers have weighed on Apple shares. I anticipate demand pull-through from Q1'17, suggesting that 10% y/y sales growth in China is attainable from Q2'17 onwards. This more optimistic scenario isn't priced into AAPL suggesting meaningful upside to earnings for the remainder of FY'17.

Apple Inc. has made preparations to start the holiday sales season on a high with a one-day sale on Black Friday. There are multiple reports of Apple releasing three iPhone models in 2018. With reports of up to 100M orders for OLED displays, Is Apple setting up for a massive FY 2018?

Neither Amigobulls, nor any members of its staff hold positions in any of the stocks discussed in this post. The author may not be a certified/registered investment advisor, and the opinions expressed should not be treated as investment advice. Buying and selling of securities carries the risk of monetary losses. Readers/Viewers are advised to carry out their own due diligence and consult their investment advisors before making any investment decisions. Neither Amigobulls, nor the author have any business relationship with any of the companies covered in this post.

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